Barbados!Services!Sector!! Development!Strategy!

Transcription

1 BarbadosServicesSector DevelopmentStrategy PROGRESSREPORT July2013 PREPARED&BY& & & & Mark&Hellyer& of& & &

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3 & Barbados(Services(Sector(Development(Strategy Project Recipient Barbados Coalition of Services Industries Project Funded by Commonwealth Secretariat PX/BRB/0735 Project Implemented by CTA$Economic$&$Export$Analysts$Ltd$ 505#Pinner#Road# Harrow## HA2#6EH# United#Kingdom# # Tel:#(+44)#870#199#5835## #[email protected]### Web:# Memberships

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5 Acknowledgements Thisreportisbasedonresearchundertakenbetween29 th Apriland30thJune2013.Itinvolved over75interviewsinbarbados,reviewofmorethan25researchpapers,policydocumentsand statistical reports, extensive market research global services markets and close consultation with the Commonwealth Secretariat, Project Steering Group and the Barbados Coalition of Services Industries (BCSI). The team is extremely grateful for the organisation and guidance providedbybcsiandtheopennessandcooperationofallparticipants.however,thefindings, opinionsandrecommendationsexpressedinthisreportremainthoseoftheprojectteam and do not necessarily reflect those of the Commonwealth Secretariat, BCSI, Government of BarbadosorProjectSteeringGroup.

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7 Contents 1# ExecutiveSummary...1# 2# SituationAnalysis...3# 3# BusinessProcessOutsourcing(BPO)...5# 3.1# GlobalMarket...5# 3.2# TheBPOIndustryinBarbados...6# 3.3# BPOPotentialinBarbados...6# 3.4# Challengestobeaddressed...7# 4# InternationalBusinessCompanies(IBC)...9# 4.1# GlobalMarket...9# 4.2# TheIBCIndustryinBarbados...9# 4.3# IBCPotentialinBarbados...10# 4.4# Challengestobeaddressed...10# 5# ICTServices...11# 5.1# GlobalMarket...11# 5.2# TheICTIndustryinBarbados...12# 5.3# ICTPotentialinBarbados...12# 5.4# Challengestobeaddressed...13# 6# TertiaryEducationServices...14# 6.1# GlobalMarket...14# 6.2# TheTertiaryEducationSectorinBarbados...16# 6.3# PotentialforTertiaryEducationbusinessinBarbados...17# 6.4# Challengestobeaddressed...17# 7# ConstructionRelatedProfessionalServices...19# 7.1# GlobalMarket...19# 7.2# TheConstructionRelatedProfessionalServicesIndustryinBarbados...20# 7.3# PotentialforProfessionalServicesinBarbados...20# 7.4# Challengestobeaddressed...21# 8# CreativeIndustries...22# 8.1# GlobalMarket...22# 8.2# CreativeIndustriesinBarbados...22# 8.3# CreativeIndustriesPotentialinBarbados...23# 8.4# Challengestobeaddressed...23# 9# HealthandWellnessTourism...24# 9.1# GlobalMarket...24# 9.2# TheHealthandWellnessTourisminBarbados...27# 9.3# PotentialforHealthandWellnesstourisminBarbados...27#

8 9.4# Challengestobeaddressed...28# 10# BusinessSupportServices...29# TheRoleofServicesinCompetitiveness...29# TheBusinessSupportSectorinBarbados...30# BusinessSupportPotentialinBarbados...31# Challengestobeaddressed...31# 11# Conclusions...33# 11.1# Guestimateofsectoralbreakdown...33# 11.2# SelectionofPriorityServicesSectors...34#

9 ProgressReport 1 Executive)Summary Thefollowingsectionsummarisesthekeyfindingsofthesectoranalysisandmakesrecommendationsforthesectorstofocusoninthestrategy(highlighted inthetablebelow).combined,thesesectorswouldgeneratearoundus$450million(b$900million)ofnewbusinessfortheservicessector,equivalentto10 %ofgdp.thestrategywouldnotjustfocusonthesesectors,butdevelopaconduciveenvironmentforallservicessectorssoanadditionb$20millionmaybe expectedfromotherindividualservicesprovidersacrossthesector BPO IBC ICT Tertiary Education Construction related professional services Creative Industries Healthand wellness Business Support Services Globalvalueof sector US$135 billion na US$1,200 bllion US$40billion US$1,700 billion US$800 billion US$100 billion na Valueproposition (mediumterm) US$55 million US$63 miilion US$192 million US$150 million US$5million US$5million US$25 million US$49 million Employment generation 2,000direct jobs 750direct jobs 800direct jobs Few educators withmany indirectjobs 100s 100s High100s High100s Qualityofjob Medium LowGmedium High Mixed High Medium High Medium Ownership Mixed FDI Local Local Local Local Mixed Local Easeof realisation Longtermgrowth prospects Easy Hard Medium Easy Medium Medium Mixed Hard Good Good Good Good Low Low Good Good BarbadosServicesSectorDevelopmentStrategy

10 ProgressReport 2 Situation(Analysis ThissectionpresentsanoverviewoftheavailableinformationontheservicessectorinBarbados.The datapresentedthroughoutthisreportisdrawnfromavarietyofsourcesincludingnationalaccounts, internationaltradeinservicesstatisticsandestimatesfromnationalservicesassociationsandprivate sector operators. These estimates are NOT accurate and are not meant to be definitive. In the absenceofmorerobustdata,theseestimatesareatooltoassistintheprioritisationofthewider sector strategy being developed. However, more accurate and detailed analysis of each sector in Barbadosisneeded. Services are the most important component of the Barbados economy amounting to B$ 5.5 bn (US$2.8bn)andaccountingfor65%ofGDP.Employmentintheservicessectortotals94,700,which is74%ofallemployedpersons.approximately21%ofservicesjobsareinwholesale/retail,19%in financeandbusinessand18%inpersonalservicesprovision(includingeducationandhealth). Table1presentstheavailabledataonthevalueofthedifferentservicessectorsandexportsfrom officialstatistics. It shows that 42% of services income in Barbados is in the financeandbusiness group,ofwhich,40%isderivedfromexport.around31%ofservicesareindistributionandleisure (includinghotels,restaurantandretail),ofwhichover80%isexport. Table&1:&Principal&Services&Sectors&in&2011& & Value&of&the& Sector& 1 && (B$m)& %&of&the& services&sector& Employment& Exports 2 && (B$m)& %&Export& Finance&business & 42.0%& 17,800& 921.4& 39.7%& Otherbusinessservices& Insurance& Finance& Computer&information& Royaltiesandlicencefees Distributionandleisure & 30.9%& 33,500& & 82.8%& Hotels/restaurant& Wholesale/retail& Travel& Transportstorageandcommunication 609.9& 11.0%& 8,500& 95.4& 15.6%& Transport& 44.6 Communications 50.8 Construction 374.7& 6.8%& 14,600& 5.4& 1.4%& Construction& 5.4 Personal(incl.health,education&other) 291.5& 5.3%& 17,400& 0.8& 0.3%& Personalservices& 0.8 Other & & & 725& & TotalServices 5,524.6& 64.0%& 94,700& 3160& 57.2%& TotalEconomy 8, BarbadosEconomic&SocialReport CalculatedfromUNCTADStat(2013) 3 BarbadosServicesSector DevelopmentStrategy

11 Situation(Analysis( ProgressReport Withinfinanceandbusinessgroup,otherbusinessservicesexportsrepresentonethird(32.5%)of the sector. Given other business services would likely also have domestic sales, it is almost certainly the largest segment of the group. However, little is known as to the relative values and importanceofeachofthesetoeitherexportofservicesordomesticproduction. Basedondiscussionsheldduringthescopingmission,thefollowingsectorshavebeenassessedin theremainingsectionsofthereport. Businessprocessoutsourcing: includescallcentres,backofficesupportandispartofbusiness and finance services valued at B$ 2.3 bn and export of other businessservicesb$750million. Internationalbusinesscompanies:includes foreign companies registered in Barbados where their mainactivitiesareconductedelsewhere.thisispartofbusiness and finance services valued at B$ 2.3 bn and export of other businessservicesb$750million. ICTservices: Educationservices: Professionalservices: CreativeIndustries: HealthandWellness BusinessDevelopmentServices: includes IT installation and software development part of business and finance services valued at B$ 2.3 bn with exports valuedatb$23million. includes higher education, technical and vocational training, professional qualifications and English language training. These arepartofpersonalservicesvaluedatb$291millionandexport of personal services of B$ 0.8 million. Revenue from foreign studentswillalsobeasmallpartofhotels,restaurantsandretail ofb$1.7bnandretailandtravelexports(spendinginbarbados offoreignnationals)ofb$1.4bn. includes architectural, engineering, surveying, planning and management consultancies and is also part of business and financeservicesvaluedatb$2.3bnandexportofotherbusiness servicesb$750million. includesperformingarts,musicrecordings,film,art,photography and fashion design. These sectors will cut across business and finance, personal and hotels, restaurants and retail valued at B$4.3bnandpartofexportsofroyaltiesofB$6.6million. includesmedicalandwellnessservices.thesearepartofpersonal servicesvaluedatb$291millionandexportofpersonalservices of B$ 0.8 million. Revenue from foreign students will also be a smallpartofhotels,restaurantsandretailofb$1.7bnandretail andtravelexports(spendinginbarbadosofforeignnationals)of B$1.4bn. includesservicesdeliveredtovaluechainsinbarbadosispartof businessandfinanceservicesvaluedatb$2.3bn. BarbadosServicesSector DevelopmentStrategy 4

12 ProgressReport BPO( 3 Business'Process'Outsourcing'(BPO) ThedefinitionofBusinessProcessOutsourcingisabroadtermtoincludethehiring(outsourcing)of anoutsidecompanytoundertakespecificbusinessfunctions.themostcommonbpofunctionsare: custom service and sales; finance, accounting and payroll; human resource management and procurementandlogistics.italsoincludesknowledgeprocessoutsourcing(kpo),whichisdefinedas activitieswhichrequiregreaterskills,knowledgeandeducationtohandle(essentiallyhighervalue BPOacrossthemainsectors).BPOdoesnotgenerallyincludeICTandsoftwaredevelopment. 3.1 GlobalMarket TheglobalBPOindustry(includingoutsourcingbusinessservicestonationalandforeigncompanies) wasestimatedatus$135billion(b$270billion)in2011 3,ofwhichsomeUS$25billion(19%)is outsourcedtoforeigncountries.thekeytrendinbpoisthatthemarketisfastgrowingwithaverage annualgrowthratesof6.6%overrecentyearsandariseinoffshoreoutsourcing(fromonly10%in 2008to19%in2011).Themainmarketsegmentiscustomerservicesandsaleswhichaccountsfor over50%oftotalbpo services. Almost75%ofUSand Europeanmultinational companiesnowusebpo services.overall29%ofus andeuropeancompanies expecttoincreasetheiruse ofbpointhenearfuture. Indiahasbyfarthelargest shareoftheworld sbpo withover50percentof worldexportsandmorethan 245,000peopleemployedin exportingbpo.ranked secondischinawithanestimated14percentofexportsfollowedcloselybythephilippines,which hasafurther12percentandover200,000employees.malaysiaisthefourthlargestsupplierofbpo whilstdevelopedcountriessuchascanadaandirelandhave8.5and7.5percentofglobalexports respectively.other,relativelynewcountriesaredevelopingoffshorebpoindustriesincluding EasternEurope,Morocco,EgyptandSouthAfrica. TheglobalmarketforendusersofBPOisdominatedbytheUSAwhichrepresents59percentofthe market.europefollowswith27percentandissettogrowrapidlyoverthenextfewyearsasit catchesupwiththeusandtriestobecomegloballymorecompetitivethroughreducingcosts. Figure'1:'Global'BPO'Market' Logistics) 3%) Human) Resource) 18%) Finance/ Accounts) 23%) Customer) Services) 54%) KPO) 2%) 3 MarketShareAnalysis:BPO(2012)Gartner 5 BarbadosServicesSector DevelopmentStrategy

13 BPO((( ProgressReport Table(2:(Principal(BPO(Market(in(2010( Market Market Share% USA 59% Europe 27% Asia Pacific inc Japan 9% Other 5% Thedrivingfactorbehindthedevelopmentofoffshoreoutsourcinghasbeentheneedtocutcosts (especiallynowduringtheglobalrecession)whiletheenablingfactorhasbeentheglobalelectronic internetnetworkthatallowsdigitaldatatobeaccessedanddeliveredinstantly,fromandtoalmost anywhereintheworld. 3.2 TheBPOIndustryinBarbados BusinessprocessoutsourcingsectorispartofbusinessandfinanceservicesvaluedatB$2.3billion andpartofexportofotherbusinessservicesvaluedatb$750million.dataonthebposectorin Barbadosisnotreadilyavailable.Discussionswithavarietyofassociationsandoperatorssuggest thatthereareperhapsaround20companiesinbarbadosinvolvedincustomerservicecallcentres, financeandaccountingbackoffice,insuranceclaimprocessing(kpo)andpharmacyprescription processing(kpo).itisalsoclaimedthat5,000personsareemployedacrossthesector. Table(3:(Average(wages(and(revenue(per(employee(in(BPO( Average per agent labour costs per month Labour costs as percentage of total costs India Scotland US US$400 US$ 1,500 US$ 2,000 33% 67% 67% Average revenue per employee US$ 16,000 US$ 24,000 US$ 34,000 AssumingthatcostsandrevenueperemployeeequatetoalevelbetweenthatofScotlandandIndia (atus$20,000forbothvoiceandnonevoicebpo) 4 thenthesectorinbarbadoscouldbevaluedat US$100million(B$200million).ThisindicatesthatBPOrepresents9%ofthebusinessandfinance servicesgroupandgivenitislikelythatthemajority(ifnotall)ofbpoisexportoriented,thenbpo couldbearound27%of OtherBusinessServices exports. 3.3 BPOPotentialinBarbados ThereisnodoubtthatBPOisanimportantsectortotheservicesindustryinBarbados.However, highstaffturnoverratesacrosstheindustry(averaging40%inindiancallcentres),thesizeof Barbados s graduate workforcewilllimitgrowth.however,muchofbarbados sbposectoris low end andthereforeanygrowthislikelytoderivefrommovementupthebpovaluechaintokpo activities.theglobalkpomarketby46percent,fromus$1.2billionin2003tous$17billionin2010 andtherehasbeenamoveinsomeoutsourcingcompaniestowardsjobsforjobsfordoctors, engineers,charteredaccountantandarchitects. 5 AmovetowardsKPOhasseveralbenefitsfor 4 India sitesandbpoindustry(2013)dunnandbradstreet 5 KnowledgeProcessOutsourcing(KPO)Services(2013)KPOExperts BarbadosServicesSector DevelopmentStrategy 6

14 ProgressReport BPO( Barbadoswithlowerstaffturnoverrates,aslowas4%perannum,andmuchhigherrevenueper employeeatanaverageus$55,000. Soforexample,attractinganadditional2,000KPOjobstoBarbados,couldgeneratearoundUS$110 million(b$220million)inrevenue,contributinganadditional2.5%togdp. 3.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. ThemaindecisioncriteriaforselectionofoffshoreBPOprovidersbyinternationalclientsare: Availabilityofqualifiedworkforce Costs InformationCommunicationsTechnologyinfrastructure TimeZones Language QualityAssurance Trackrecord(Brandreputation) Confidentiality Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Availability(of(qualified(workforce.Sufficienthighlevelgraduateandpostgraduateswillbe requiredifbarbadosistooverupthevaluechaintokposervices.theavailability(numbersand qualifications)ofpotentialworkerswillhavetobeexaminedandanynecessarypoliciesputin placetoaddressthis.theuniversitiesandcommunitycollegesofferwellreputeditandbusiness programs.thecurrentproblemhowever,isthat they regraduatingalotofworkers,butthose workersdon thavetherequisiteexperience, accordingtokm2solutions(inbarbados). Inour ownbusinesswehaven tbeenthatsuccessfulatfindingqualifiedtechworkers,andthelackis notintermsofeducationbutintermsofconcreteitworkexperience Costs:Costsareakeycriteriaforanyoutsourcing(it sthemainmotivation).thereneedstobea significantcostdifferencebetweentheoriginalandoutsourcedcountriesinwages,rentals, communicationsandenergy.costsinbarbadosaregenerallyhigh,butthisbecomesless problematicasbusinessissoughthigherupthebpovaluechain.nevertheless,costsarestill importantandneedtobeinvestigatedfurther. 3. ICT(infrastructure:ThequalityofICTinfrastructureavailable(reliabilityandbandwidth)can severelyaffectcompetitivenessinkpoprovision.inaddition,theavailabilityofictequipment willalsoaffectcompetitiveness,aswilltheservicingandmaintenanceofictsystems.where equipmenthastobeimportedand/orservicedbyforeignproviders,easeofentrytobarbados ofserviceprovidersandproducts(egimportdutiestreatment)couldbeafactor. 4. Time(Zones:Neareshoring(useofneighbouringcountriesforoutsourcing)isparticularly importantforkposervices.therefore,barbadoshasiswellsuitedfornorthamericanmarkets. 5. Language:Again,languageproficiencyisimportantandbecomesincreasinglyimportantasKPO servicesaredeveloped.forvoicebpo,accentisalsoakeydeterminant(forexample,usindian accentshavebeenseentobeunacceptablewhereasphilippinesaccentarenot. 6 CaribbeanITTalentSupply:CanDominicanRepublic,JamaicaandBarbadosGoHigherValue?(2011)NearshoreAmericas 7 BarbadosServicesSector DevelopmentStrategy

15 BPO((( ProgressReport 6. Quality(Assurance.Servicesdeliveryisnot physical inthesenseofbeingabletoprovideclients withsamples,aswithaproduct.therefore, qualityassurance ofservicesbecomesvitalto provideclientswiththeconfidencethattheservicesprovidedwillbeconsistentandofahigh standards.developmentofindustrystandards,codesofpracticeandqualityassuranceschemes areareastodevelop(thismayalsoincludeethicsandlabourstandards). 7. Track(record:Alliedtoqualityisexperienceworkingwithotherorganisationstoasatisfactorily level.theuseofsectororganisation,casestudies,promotionandbrandingmaybeconsidered. 8. Confidentiality:Oneofthemostimportantissuesistokeepthecustomer sdatasecureatthe providers site.thisrelatestobothsecurity(protectinginformationfromunauthorisedaccess) anddisclosureofinformation.theseissuescanbeaddressedthroughdevelopmentofstandards andanenforcedlegalframework. BarbadosServicesSector DevelopmentStrategy 8

16 ProgressReport IBC( 4 International*Business*Companies*(IBC) International Business Companies (IBCs) are limited liability companies registered by international corporationsintaxefficientjurisdictionsoutsidetheirnormalcountryofoperation. Theownership andbusinessactivities,ingeneral,lieoutsidethecountryofregistration(outsidebarbados). 4.1 GlobalMarket IBCshavegrowninrecentyearsdueinpart,tothegrowthofglobalvaluechainsthatmeanthata companybasedinonecountrycanproduceinoneormoreothercountriesandsupplygoodstoa thirdcountrywithouteverinvolvingitsowncountryoforigin.therefore,forefficientlegaltax planning,offshorecompaniesprovideanimportantvehicletosupportandmanagethese internationalglobalvaluechains.statisticsonthenumberofibcsworldwideandthevalueofthe industrytohostcountriesgloballyarenotavailableastherehasbeenadegreeofsecrecyand confidentialitysurroundingthesectoringeneral.however,inrecentyears,withthegrowthofantie terrorismfinancingandantiemoneylaunderinginitiatives,greaterregulationandtransparencyis beingintroducedtothesector,especiallythroughstandards,guidelinesandbestpractiseissuedby theorganisationforeconomiccoeoperationanddevelopment(oecd)andthefinancialactiontask ForceonMoneyLaundering(FATF).FATFissuesalistof"NoneCooperativeCountriesorTerritories" (NCCTs),commonlycalledtheFATFBlacklist.TheeffectoftheFATFBlacklisthasbeensignificant, andarguablyhasprovenmoreimportantininternationaleffortsagainstmoneylaunderingthanhas thefatfrecommendations.while,underinternationallaw,thefatfblacklisthasnoformal enforcementorsanction,inreality,ajurisdictionplacedonthefatfblacklisthasoftenfoundit difficulttoattractanylegitimateibcswhichhasledmanyoecdcountriestoplacefinancialpressure onthesestates. Thedrivingfactorsforthesectorare: exemptionfromlocalcorporatetaxationandstampduty,providedthatthecompany engagesinnolocalbusiness(annualagent'sfeesandcompanyregistrationtaxesare stillpayable,whicharenormallyafewhundredu.s.dollarsperyear) preservationofconfidentialityofthebeneficialownerofthecompany widecorporatepowerstoengageindifferentbusinessesandactivities abrogationorrestrictionoftherequirementtodemonstratecorporatebenefit theabilitytoissuesharesineitherregisteredorbearerform anabrogationofanyrequirementstoappointlocaldirectorsorofficers provisionforalocalregisteredagent 4.2 TheIBCIndustryinBarbados TheIBCsectorispartofbusinessandfinanceservicesvaluedatB$2.3bnandexportofother businessservicesb$750million.dataontheibcsectorinbarbadosisnotreadilyavailable. Discussionswithavarietyofassociationsandoperatorssuggestthatthereareapproximately4,000 IBCsregisteredinBarbados,employingaround3,000fulltimeemployees.Thevalueofthissectorto Barbadosisdeterminedbyregistrationfees(US$450pa),localtaxes(slidingprofittaxfrom2.5e 0.5%),salariestolocalstaffandagentsaswellasotherbusinessservicesprovidedtothese companiessuchasbanking,legalandauditandaccountingservices.ifitisassumedaverage1full 9 BarbadosServicesSector DevelopmentStrategy

17 IBC((( ProgressReport timestaffmemberofus$12,000,feesofus$450andotheragent,legal,financialservicesof US$50,000perbusinessperannum,thenthevalueofthesectorwouldequatetoUS$250million (B$500million)+profittax 4.3 IBCPotentialinBarbados ThesizeofBarbados sibcsectorisrelativelysmallcomparedwithothersintheregionsuchas CaymanandBVI(BVIforexamplehas600,000IBCsregistered). 7 Therefore,thereisscopeto increasethenumberofregistrations.bytargetinglarge legitimate corporations,a25%risein registrationsandassociatedsalaryandbusinessservicingrevenuescouldforexample,createan additional750directjobsbarbados,couldgeneratearoundus$62.5million(b$125million)in revenuetogdp. 4.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. ThemaindecisioncriteriaforselectionofIBCbyinternationalcorporationsare: Competitiveness(TaxratesandBDScosts) Internationalreputation Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Competitiveness((Tax(rates(and(BDS(costs).The legitimate reasonforestablishinganibcis foundedinefficienttaxplanningtosavethebusinessmoneyforitsshareholders.therefore,the taxregimecomparedtoglobalcompetitors(bvi,seychelles,channelislandsetc).inaddition, thequalityandcostofmanagementagentsandotherbusinessdevelopmentservicesproviders alsoaffectscompetitivenessofdestinations. 2. International(reputation:ThemajorityofbusinessintheIBCcomesthroughreferralsfrom sourcecountrytaxandbusinessadvisors.reputationasasafe,secureandcredibledestination withinternationallyrecognisedrigorousregulationandsupervisionofthesector.therefore,the legal,regulatoryandenforcementofinternationalstandards(especiallythosesetbyfatf,oecd andglobalforumontransparencyandexchangeofinformationfortaxpurposes. 7 BVIOffshoreAdvantages(2013)FidelityCorporateServices BarbadosServicesSector DevelopmentStrategy 10

18 ProgressReport ICT( 5 ICT$Services The global ICT industry comprises computer hardware, software, computer services and communications.therefore,ictservicesisaspecificsubsetofictindustryasawholeandincludes computer software and computer services. Computer software includes the value of purchased or leased packaged software such as operating systems, database systems, programming tools and applications. It excludes expenditures for internal software development and outsourced custom softwaredevelopment.computerservices:includesthevalueofoutsourcedservices domesticor offshore such as IT consulting, computer systems integration, outsourced custom software development, outsourced web design, network systems, network systems integration, office automation,facilitiesmanagement,webhosting,anddataprocessingservices.itwouldnotinclude IThelpdeskswhichwouldbepartoftheBPOsector.( 5.1 GlobalMarket Theglobalmarketforcomputersoftwareandservices(excludingsoftwareembeddedindevices) amountedtoanestimatedus$1.2trillionin2011,comprising844billionincomputersoftwareand US$357billionincomputerservices. 8 Developedcountriesaccountforthelargestshareofthe globalmarket.northamericaandeuropeaccountfor80%ofthetotalmarketin2011(figure2).the remainingshareismainlyaccountedfor byasia,whilemarketsinthedeveloping regionsofafrica,latinamericaandthe MiddleEastcorrespondedtoonly4per cent,wellbelowtheirshareofworld GDP(10percent).Thissuggests significantscopeformarket developmentofthecomputersoftware anditservicesindevelopingcountries. Growthismuchhigherinthese economies,growingby40%between 2008and2012comparedtoonly15%in NorthAmerica. 9 Exportsofcomputerandinformation servicesamountedtous$215billionin 2010,andhavedoubledsince2005 reflectingstronggrowthinoutsourcing. Invalueterms,IrelandistheleadingexporterwithexportsrisingfromUS$7billiontoUS$37billion between2000and2010.incostarica,indiaandthephilippines,computerandinformationservices accountfor1 2percentofGDP.Themaindevelopingcountryexportersofcomputerand informationservicesamongexportersareallasianandincludeindia(15.7%),china(4.3%),the Philippines(0.9%)andSingapore(0.8%). 8 InformationEconomyReport(2012) 9 EuropeanInformationTechnologyObservatory(EITO)Survey(2011) Figure'2:'ICT'Services'Region' North) America) 46%) Africa) 1%) Middle) East) 1%) Latin) America) 2%) AsiaF PaciGic) 16%) Europe) 34%) 11 BarbadosServicesSector DevelopmentStrategy

19 ICT((( ProgressReport Table(4:(Principal(ICT(Suppliers(Market(in(2011((US$(bn)( Market Value of ICT Services Export Market Share% Ireland % India % Germany % US % UK % China % Total TheEuropeanUnion,USandJapanarethetopthreeimporterswhiletheBRICcountriesareamong thetopten. Currentdemanddriversofsoftwareindustrydevelopmentincludemobilecommunicationsand socialnetworkinggrowthaswellascloudcomputinganddemandfornationalcontent.thegrowth offreelancingandcrowdsourcingservicesisalsoakeyfuturetrend. 5.2 TheICTIndustryinBarbados TheICTsectorispartofbusinessandfinanceserviceswhicharevaluedatB$2.3billion.ICTservices exportsfrombarbados 10 totalb$22.8millionandindustryobserversandparticipantsestimatethat exportsrepresentonly25%ofthevalueofthesector.therefore,itisestimatedthattotalsalesof ICTservicesinBarbadosareB$91.2million. 11 Thereareapproximately100firmsinthesector,the majorityofwhom(65%)aresmall,employinganaverageof5people,30%mediumsizedemploying anaverageof20and5%largefirms,employinganaverageof40people.thereforeitisestimated thataround1,125personsareemployedinthesector. Themainconstraintsreportedbythesectorare: Lackofprofessionalstandards Lackoflegislationfordataprotection(improperandcarelessuseofdata) Lack of understanding of the sector amongst financial institutions and venture capitalistsresultinginlowlevelsofinvestment 5.3 ICTPotentialinBarbados GlobalmarketsforICTservicesaregrowingrapidlyandgiventherelativesuccessofexportstodate andthenumbersoflocalictgraduatesproducingupwardsof400+graduatesperyear(bcc100and UWI300) 12 thereisscopetodevelopupstreamictservicesfortheglobalmarket.ictjobsarehigher paidthan,forexample,bpojobs,reflectingthehighrevenueperemployeepotential. 10 calculatedfrombalanceofpaymentsdatabyunctad(2013) 11 NotetheBarbadosAssociationofICTProfessionalsestimatedthetotalvalueofthesectorinBarbadosforB$10million, butthisislessthanhalfofofficialictservicesexports. 12 Strategic Marketing Plan for Professional Services Exports Barbados (2007) Caribbean Export/Commonwealth Secretariat BarbadosServicesSector DevelopmentStrategy 12

20 ProgressReport ICT( Table(5:(Salaries(and(Income(in(ICT((US$)( Market Average Salaries Revenue per employee Ireland 54, ,000 India 9,000 55,000 Germany 47, ,000 UK 50, ,000 Barbados - 40,500 Soforexample,ifBarbadoscouldincreasethenumberoflargefirmsintheICTsectorbyan additional20firms,creatinganadditional800jobsandincreaseearningsperemployeeto US$60,000thenBarbadoscouldgeneratearoundUS$48million(B$96million)inrevenue. 5.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. ThemaincriteriafordevelopmentofacompetitiveICTsectorare: CapacityofICTFirms Securingaccesstorelevantskills Fosteringsoftwaredemand Amodernlegalframework Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Capacity(of(ICT(Firms:(Encouragingqualityoffirmsthroughcertification,standardsand certificationschemes.((( 2. Securing(access(to(relevant(skills:(Skillsdevelopmentthroughtheeducationsystemand specialisedinstitutions(linkingindustrytoeducationprovisiontoensuresupplymeetsdemands ofbusiness)andinehousetraining(todevelopgraduatesintoproductiveemployees.( 3. Fostering(software(demand:(Publicprocurementasatooltoboostdomesticdemandand promotinggreaterictuseintheprivatesectorwillhelpdevelopandbroadenskillsinthe domesticmarketthatcanthenbetransferredtointernationalmarkets(basedonexperience andskills)(( 4. A(modern(legal(framework:(Intellectualpropertyregulationandenforcementandelectronic transactionsaresomeofthelegalframeworksthatneedtobedeveloptosupportthesoftware sector BarbadosServicesSector DevelopmentStrategy

21 Tertiary(Education((( ProgressReport 6 Tertiary(Education(Services The World Bank 13 defines tertiary education as including: universities as well as institutions that teachspecificcapacitiesofhigherlearningsuchascolleges,technicaltraininginstitutes,community colleges,nursingschools,researchlaboratories,centresofexcellence,anddistancelearningcentres. Within the context of Barbados, a further subpsector breakdown to include higher education (undergraduate, 14 post graduate and research), technical vocational education and training (including Beauty, 15 ICT, business and management and hospitality, tourism and catering), English LanguageTraining(ELT)andProfessionalQualifications(suchasAccounting, 16 Nursingtraining 17 and Medical). 6.1 GlobalMarket TERTIARYEDUCATIONSECTOR Theglobalmarket 18 foreducationexportsisestimatedatoverus$40bn.anestimated3million studentsstudyfulltimehighereducationoutsidetheirhomecountries(thisexcludesexchange students)withanestimatedvalueofus$30bn.inaddition,over1.3millionstudentstraveltostudy EnglishasaforeignlanguagewithanestimatedmarketvalueofUS$10billion. 19 Thereisalsoa growingmarketfortravelfortechnicalandvocationaleducationandprofessionaleducation(suchas nursingandaccounting)althoughnofiguresarereadilyavailableforthesesegments. HIGHEREDUCATION OftheUS$30billionmarketforhighereducationservicesexport,thetopdestinationremainsthe EU(withUK,GermanyandFrancealone32%)accountingforaboutonethirdandUS,accountingfor justlessthanonequarter(22%)ofthemarket Table(6:(Global(Higher(Education(Destinations(( Top Host Destinations Global Market Share United States 22% United Kingdom 12% Germany 10% France 10% Australia 7% China 6% Japan 5% 13 K:148956~piPK:216618~theSitePK:282386,00.html#what_why 14 Excludesmedicalandnursingqualificationsthatwouldberecognizedforpracticenationallyorinternationally 15 Excludes, in the context of Barbados training in massage and alternative therapies such as Reiki. Although strictly speakingthesewouldfallintothisor othereducationservices categories,itismorerelevantfromapolicyperspectiveto includeitinanysurveyofthewellnesssectorasanypolicydecisiontopromotewellnesswouldincludewellnessskillsand training. 16 ThiswouldnotincludedegreesbutwouldcompriseprofessionalqualificationssuchasAssociationofCharteredCertified Accountants(ACCA) 17 Thiswouldincludedegreesandassociatedegreesrequiredforinternationalornationalregistrations 18 OECD,EducationataGlance, LanguageTravelMagazine(2011) BarbadosServicesSector DevelopmentStrategy 14

22 ProgressReport Education(Services( Canada 3% Other 25% Total 100% Source:(OECD,(Education(at(a(glance,(2007( Thenumberofstudentsstudyingabroadisrisingatover15%perannumandtheplacesavailablein thetraditionalglobaleducationdestinations(us,uk,germany,franceandaustralia)aredeclining andvisasareevermoredifficulttoobtain,evenforgenuinestudents.therefore,thereisan increasingopportunityfornewdestinationstoemergeandattractthesestudents. ENGLISHLANGUAGETRAINING TheglobalmarketforELTisestimatedatUS$10billionperyear.MorethantwoethirdsofELT studentstravellingforstudyoriginatefromasia(china,korea,japanandtaiwan).followingasia, Europe(RussiaandItaly)andLatinAmerica(Brazil)representsignificantmarketsforELT. TheUKisthelargestexporterofELTrepresentingover50%oftheglobalmarketfollowedbyUS, Canada,AustraliaandIreland. Table(7:(Global(ELT(Destinations( Top Host Destinations Global Market Share United Kingdom 54% United States 16% Canada 13% Australia 8% Ireland 6% New Zealand 2% Malta 1% South Africa <1% Total 100% Source:(Language(Travel(Magazine((2010)( TheBritishCouncilhasundertakenresearchintoglobalmarketsforELT,includingthosetakingELTin theirhomecountryaswellastravellingforelt.overthenext10years,itestimatestheincreasein marketdemandforeltatover45millionstudentsperyearcomprisingchina22million,india16 million,russia4million,brazil3millionandpoland2million.ifonly5%oftheseelecttotravelfor ELT,thenanadditional2.25millionELTstudentswillbelookingfordestinationsaroundtheworld withtheeltexportmarkettriplingoverthisperiod. TVET Agrowingnumberoffirmsandstudentsareelectingtoundertakevocationalandtechnicaltraining overseastoobtainbetterskillsandqualifications,especiallywherethesearenotavailablelocally. Thisisanextremelynewsegmentandmarketresearchhasnotbeenundertakenspecificallyonthis segment.however,anecdotallyevidenceshowsthatthereispotential(oftencombinedwithelt). ThegovernmentofGermany,forexample,hasbeenactivelypromotingitstechnicaltrainingservice providersthrougheventsinitsembassiesthroughouttheworldincludinginus,india,ukandchina BarbadosServicesSector DevelopmentStrategy

23 Tertiary(Education((( ProgressReport PROFESSIONALQUALIFICATIONSTRAINING Theglobaldemandforprofessionalqualificationsisbeingfuelledbytheacceptanceandrecognition ofcertainqualificationsthroughmutualrecognitionagreementsand.professionalqualifications trainingcutsacrossbothhighereducationandtvet.forexample,globalstandardsandnormsin professionssuchasaccountingmeansthatifanaccountantisqualifiedinacca,itdoesnotmatter wherethestudentstudies,thequalificationisrecognisedandacceptedthroughouttheworld. Shortageofplacesanddemandforsubsequententrybythestudenttothirdcountriestoworkalso drivesdemandforprofessionalqualifications.forexample,studyingmedicalandnursingtraining abroadisnowanestablishedsegmentas,forexample,foreveryoneplaceavailableatmedical schoolsintheus,thereare4americanstudentswiththerequiredqualificationscompetitionfor eachplace.addedtothisshortageoftrainingplaces,thereareglobalshortagesofmedicalstaff throughouttheworldwhichispredictedtocontinue.afinaldriveristhirdcountrystudentsstudying forprofessionalqualificationstoofaparticularcountry(egus)asameanstoaccessandworkinthis country.forexample,inantigua,thereisamedicalschoolprovidingtraininginusmle1(entrylevel qualificationtoresidencyinushospitals)with2,000studentsofonlyindianorigin. 6.2 TheTertiaryEducationSectorinBarbados ThetertiaryeducationsectorinBarbados(directincomefromfeesandsubventions)ispartof personalservicescategoryvaluedatb$292million,ofwhichb$800,000isexportofpersonal services(otherpersonalservicesincludeprivatehealth,amongstotherservices).inaddition,for foreignstudents,therevenuesattributedtoprovisionoftertiaryeducationwillalsobepartofthe travel(expenditurebyforeignpartiesinbarbados)valuedatb$1.4billion.dataonthetertiary educationsectorinbarbadosisnotreadilyavailableandthereislimitedsectororganisation. Therefore,therearenoestimatesreadilyavailable(especiallygiventheleveloftraininginsmall privatefacilitiesfortvet).however,discussionswithavarietyofinstitutions,regulatorsand Ministriessuggestthattherearealargenumberofoperators(inexcessof100)andadegreeof exportsalready.inaddition,thereappearstobelargecapacityavailablewithforexamplea relativelyneweltbuildingatbccwithcapacityfor1,000studentsandcurrentlyonly100students enrolled.therearealsosomeprivateeltschoolsoperatinginbarbados. Basedonestimatesfromthelargereducationinstitutions(BIMAP,BCC,UWIandpoly)Barbados alreadyattractsaround4,000foreignstudentsperyear(mostlyfromothercaribbeanislands).based onanassumptionoffeeofus$2,000(acrosslongandshorttermcourses),thenfeesfromforeign studentstoeducationinstitutionswouldamounttous$8millionorb$16million(thisis20times theofficialb$0.8millioninthestatisticsforexportofallpersonalservicesindicatingeitherthe estimatesofforeignstudentsiswrongor,morelikely,thebopstatisticsarewrongandsomeof thesefeesarein otherbusinessservicesexports ).Inaddition,assumingspendperannuminthe widereconomyisus$15,000,andanaveragestageofstudentsof6months,therevenuesfrom foreignstudentscouldamounttous$30million(b$60million)makingthetotalvalueofthesector B$76million. BarbadosServicesSector DevelopmentStrategy 16

24 ProgressReport Education(Services( 6.3 PotentialforTertiaryEducationbusinessinBarbados Barbados seconomywillgeneraterevenuenotonlyfromtuitionfeesbutalso(andprobablymore importantly)fromlivingexpenses.whereasamainstreamtouriststaystwoweeks,aneducation touriststaysforonemonthtooneyear(ormore)spendingeveryday. Forhighereducationandprofessionalqualificationstraining,theannualaveragelevelofspending andcontributiontotheeconomydiffersbyexportingcountry,originoftheforeignstudentand lengthofcourse.insouthafrica,theaveragespendingpergraduatestudentisus$7,500pa whereasinantigua,usmedicalstudentsaveragespending(includingfees)amountstous$25,000. Therefore,inHigherEducationandProfessionalQualificationsTraining,attractingmainlynone Caribbeanstudentsofanadditional2,000perannum,wouldgenerateUS$50million(B$100 million)revenuesbasedonannualspendonfeesandlivingexpensesofus$25,000perstudentper annum. EnglishLanguageTraining(ELT)andTechnicalandVocationalEducationandTraining(TVE)generally compriseshorterstaysrangingfrom6e12weeks.againweeklyspendandfeesdifferbycountry: Table(8:(Average(spend(and(Stay(for(Foreign(ELT(Students( Top Host Destinations Spend per week (excl. fees) US$ Average Fee per Week US$ Length of Stay Weeks United Kingdom Ireland United States Canada Australia South Africa Source:(Language(Travel(Magazine((2009)( IfBarbadossimplymatchedSouthAfrica,thenaverageELTstudentsmaygenerateuptoUS$5,000 totheeconomy(feesandspend).inisestimatedthatsimilarrevenues(ifnothigher)couldbe gainedfromtvet.thereforeattracting20,000tvetandeltstudentsperannum(averaging9weeks stayeach,thatis5,000fulltimeequivalent)couldgenerateanadditionalus$100million(b$200 million)totheeconomy. Combined,tertiaryeducationservicesinBarbadoscouldgenerateanadditionalUS$150million (B$300million)inrevenue,adding4%toGDP. 6.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. Themaindecisioncriteriaforselectionofforeignstudentstravellingforeducationare: Qualityofeducation Costs Easeofentry 17 BarbadosServicesSector DevelopmentStrategy

25 Tertiary(Education((( ProgressReport Lifeexperience Safety/security Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Quality(of(education:Foralltertiaryeducationservices,thekeycriteriathatstudentsassessa destinationonisthequalityofeducation.qualityismeasuredbystudentsintermsofportability ofthequalification(thequalificationisinternationallyrecognizedineitherthehomecountryof athirdcountrywherethestudentwantstowork)andpassrates. 2. Costs:thecostofcoursesintermsoffeesandlivingcostsareimportantdecisioncriteria.This determinesthevalueformoneyforthesamequalificationsavailableelsewhere. 3. Ease(of(entry:howeasyitisforthestudenttoapply,theavailabilityofthecoursethewantand facilitationsupportinobtainingworkpermits,accommodationandgeneralinformationand confidenceonlivinginanunfamiliarcountry. 4. Life(experience:increasinginacompetitiveworkplace,studentsarelookingtodifferentiate themselvesfromthecompetition.therefore,studyingabroadcanprovideanewdimensionand saleabilityinthejobmarketpostqualification.thereisscopetolinkeducationwiththeseother experiences,addingvaluethroughalternativeexperiences(workexperience,leisureexperience andvolunteering).forelt,oftenthelureoflearningcombinedwithvacationor vocational/academiclearningcanbekeydrivers. 5. Safety/security:especiallyinhighereducation,thesafetyandsecurityofboththecampusand countryareafinalconsideration thisisbothactualandperceivedreputationofthecountryin thecountryoforigin.wheretheactualcountryisnotwellknown,itcouldbeadversely associatedwithothers(egbarbadoswithjamaicawouldbeareputationtodispel) BarbadosServicesSector DevelopmentStrategy 18

26 ProgressReport Professional(Services( 7 Construction*Related*Professional+Services Professionalserviceswithinthecontextofthisreportrefertoconstructionrelatedservicesthatare provided by firms, practises and consultancies that require a professional membership and/or qualifications.theseincludearchitecture,engineering,projectmanagement,planningandsurveying services. Other professional services such as accounting, other engineering, management consultancy and legal services will form part of Business Support Services in section 10 of this report. 7.1 GlobalMarket TheglobalmarketforconstructionrelatedprofessionalservicesisestimatedatUS$1.7trillion (constructionrelatedprofessionalservicesareapproximately20%ofglobalconstructionmarket, currentlyestimatedtobeus$8.5trillion) 20.ProfessionalservicesintheEUaccountfor21%of constructioncostssotoapproximateanynationalmarketforconstructionrelatedservices,itcould bereasonabletocalculate20%ofconstructionsales. Civilengineeringservicesrepresent 90%oftheglobalmarket,valuedat US$1,530billion,withsurveying US$102billion,architectureUS$51 billionandplanningandmanagement US$17billion.However,itreported thatinengineeringservices,only US$31bn(or2percent)issourced offshore. Figure'3:'Global'market'for'Professional' Services' Planning) Services) 1%) Surveying) Services) 6%) Architectural) Services) 3%) Asiaisthelargestmarketfor constructionrelatedprofessional services,accountingfor40%, followedbyeuropeaccountingfora further20%.thisrepresentsa significantchangeinconstructionspendingawayfromtraditionaldevelopmentmarketsto developingandemergingcountries). Table(9:(Share(of(Global(Construction(Services(Industries((construction(and(professional(services)( Share of Market (2004) Share of Market (2014P) Europe 32% 20% Asia 30% 40% North America 11% 9% Middle East 10% 16% Latin America 9% 7% Africa 8% 8% Source: UNCTAD (2010) and Business Monitor International (2013) Engineering) Services) 90%) 20 GlobalInfrastructure&ConstructionThemesfor2013andBeyond(2013)BusinessMonitorInternational 19 BarbadosServicesSector DevelopmentStrategy

27 Professional(services((( ProgressReport Thistrendreflectsthechangesingrowthratesinrecentyearswheregrowthinconstructionservices indevelopingcountrieshasaveraged8%perannumcomparedwithonly2%ineurope.thistrendis likelytocontinue. Publicprocurementisthebiggestdriverforconstructionmarkets,especiallyindevelopingand emergingmarketsandonaverage,globalspendingbygovernmentsoninfrastructuredevelopment isestimatedtoaveragebetween5e7%ofgdp. 21 However,inAfrica,forexample,infrastructure spendingaverages15%ofgdp. 7.2 TheConstructionRelatedProfessionalServicesIndustryinBarbados Constructionrelatedprofessionalservicesformpartofbusinessandfinanceservicesvaluedat B$2.3billionandpartofexportofotherbusinessservicesvaluedatB$750million.Dataonthe professionalservicessectorinbarbadosisnotreadilyavailable.basedonglobalnormthat constructionrelatedprofessionalservicesarevaluedatapproximately20%ofconstructionsector, thiswouldmeanthatinbarbados,thesectorwasvaluedatb$37million.however,thisisfarhigher thanindustryestimates 22 ofb$21millioncomprisingb$6millionincivilengineering,b$10million architectureandb$5million.thismaybeacombinationoffactors(underestimationbyinparticular engineersanduseof imported professionals).exportsofservicesarereportedat10%orb$3.7 millionacrosstheindustry. Thereareapproximately30firmsintheengineeringsector,90%locallyownedwith6largefirms,10 mediumfirmsemployinganaverageof5personsandtherestsmallfirmsemploying1e2specialists. Thereare93registeredarchitectsinBarbadoswithafewlargefirmemploying25persons (architectsanddraftsman)butthemajorityoffirmsaresmallemploying,onaverage,4people. Informationonotherprofessionalswasnotavailableatthetimeofthisresearch. 7.3 PotentialforProfessionalServicesinBarbados Thevastmajorityofconstructionrelatedworkandservicesisawardedthroughpublictenders.In EuropeandUS,thesearenotopentothirdcountriesunlessthatcountryhassignedtheWTO GeneralProcurementAgreement(Barbadosisnotamember).However,undertheEPA,Cariforum professionalscanintheory,accesstheeumarket.however,inpractise,giventhesizeoffirms,itis likelythataccesswouldonlybeavailablethroughcooperationwitheufirms. Allinternationalaidcontractsaresubjecttointernationalopentenderingprocedureswhichwould allowdirectbiddingfortheseservices.moreover,pressurefromtheinternationalcommunityon governmentsthroughouttheworldhasseenthegradualopeningofallpublicprocurementto internationalcompetitionandthereductionoflocalpricepreferences(ausualbarrierto participationforforeignfirms).therefore,opportunitiesingrowthmarketssuchaslatinamerica andafricacouldseeopportunitiesforbarbadosprofessionals. Exportingofsuchservicesdependsuponnetworking,partnershipsandparticipatinginpublic procurementforbothdonorandnationalgovernmentcontractsinforeignmarkets.giventhatthe majorityoffirmsaresmall,theaveragecontract(orsubecontract)forexportsislikelytoberelatively 21 UNCTAD(2007) 22 Discussionswithaengineering,surveyorsandarchitectureassociations BarbadosServicesSector DevelopmentStrategy 20

28 ProgressReport Professional(Services( smallataroundus$250,000perannum.say20contractsperyearacrossthedifferentconstruction relatedprofessionalscouldgeneratearoundus$5million(b$10million)inrevenue. 7.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. Themaindecisioncriteriaforselectionofconstructionrelatedprofessionalbyinternationalclients (governments,developmentbanksandprivateclients)are: Qualifications Liabilityandprofessionalindemnityinsurance Capacityandexperience Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Qualifications:Recognisedqualificationsandmembershipsofinternationallyrecognised professionalbodiesareaprerequisitetoparticipationininternationaltenders.therefore, affiliationandmembershipbynationalbodiesofinternationallyrecognisedorganisations,plus mutualrecognitionagreementsarekeyareastoexplore. 2. Liability(and(professional(indemnity(insurance:Professionalinsuranceisoftenarequirementof contractsandevenifnot,thewillingnessofaninsurancecompanytoinsureaprofessional providesconfidenceinclientsastotheabilitiesofthefirm. 3. Capacity(and(experience:firmsizeisamajorconstrainttointernationaltenderswhichoften requireassetbaseandturnoverrequirements.inaddition,ontakingonlargerassignments,a largeranddiversified(includingallprofessions)practicemayfinditeasiertocompete internationally.thereforepartnershipsestablishedacrossfirmsforexportonlybusinessmaybe anoptiontopoolskillsandresourcesforexportmarkets BarbadosServicesSector DevelopmentStrategy

29 Creative(Industries((( ProgressReport 8 Creative(Industries The scope of creative industries covers sound recording and distribution (calypso, reggae, soca, modern pop etc), film locations, film production (including animation), live performance (theatre, dance,music,panandcarnival),fashion(designofclothing,jewelleryandaccessories)andartists. 8.1 GlobalMarket Themarketforthecreativeindustriesservices(music,filmandliveperformance)isestimatedat overus$800billion.thevastmajorityofthisiscomprisedus$650billionforevents,meetingsand festivals 23 (withtheukaloneestimatedatus$36bnandevenemergingmarketssuchasindia valuedatus$450millionandrisingby24%perannum).thefilmindustryisvaluedatus$84.2 billion 24 andcomprisingdistributionsales,productionandediting.musicindustryisvaluedat US$62.8billion 25 comprisingus$24.0 billion(digitalandretailsales), publishingroyaltiesus$7.7billion, synchronisationlicensingfees(music forfilmsandcompilations)us$1.1 billionandlivemusicperformances US$20.0billion. Figure'4:'Global'Market'for'Creative' Industries' Music) 8%) Film) 11%) Increasingly,liveeventsandfestivals arebeingorganisedthroughevent managementcompanies.event managementis theapplicationof projectmanagementtothecreation anddevelopmentoffestivals,events andconferences. Events) and) Festivals) 81%) EventManagementisamultiebillion dollarindustry,growingrapidly,with megashowsandeventshostedregularly.surprisingly,thereisnolittleresearchconductedtoassess thesizeandgrowthofthisindustry.increasingly,eventmanagementcompaniesarejoining internationalnetworkstoworktogether(similartoadvertisingagencies).intheuk,oneonlineweb directorylistsover700eventmanagementcompanies. 8.2 CreativeIndustriesinBarbados Thecreativeindustriessectorcutsacrosstheservicessectorcomprisingpersonalservices,business andfinance,royalties,leisureandretail.dataonthecreativeindustrysectorinbarbadosisnot readilyavailablebutthereexamplesofartistssellingmusicovertheinternetandperforming worldwide.however,themajorityofthisisaimedatdiasporaevents(bothbarbadianandwider 23 MeetingsandEventsMarket(2012)TravelManagementInstitute 24 GlobalMediaandEntertainmentOutlook2011e2015(2010)PWC 25 WorldMusicandtheGlobalMusicIndustry:Flows,CorporationsandNetworks(2012)DaveLaingInstituteofPopular Music,UniversityofLiverpool BarbadosServicesSector DevelopmentStrategy 22

30 InceptionReport Creative(Industries( Caribbeandiaspora).Inaddition,therearealsoover200galleriesinBarbadossellingart,primarilyto tourists. 8.3 CreativeIndustriesPotentialinBarbados Filmandmusicsalesareunlikelytogeneratehugesalesworldwideandprofitsandwouldcostmuch inpromotion.however,therewouldbepotentialinexploitingdigitaldistributionmoreeffectively andthenpromotinglinkstodownloads.filmandmusicproduction,processingandeditingis unlikelytobecomeanindustryinitself,althoughindividualstudiosmaybeabletodevelopniche marketsbutthiswillbebasedonindividuals,ratherthanaserioussector. However,thereisgreaterpotentialforcreativeperformerstoexporttheirservicestofestivals,and eventsworldwidebeyondthediaspora.theunescoprojectinbarbadoshasshownthatthereis,for example,interestinnorthamericaforbajanperformerswhoareperformingonthecollegecircuit. However,thisisnotcommerciallyviablewithoutUNESCOgrantfinancesoamoreprofessional approachtohighervaluemarketsegmentsisrequired.thecaribbeancreativecluster(whichhas 50%Bajanperformers)hasbeenasuccessinregionalanddiasporaeventswith3fulltimemarketing andpromotionalstaffandover100artistsontheirbooks theyactasaexportagent.similar modelscouldbedevelopedaimedatsupplyingeventmanagementcompaniesworldwide.if100 performersfrombarbadoswereabletogetcontractsworthus$50,000peryear,thenexports wouldrisebyus$5m(b$10million). 8.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. Themaindecisioncriteriaforselectionofeventmanagementandagentsare: Qualityofperformer Accesstoperformers Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Quality(of(performers.Thisdoesnotonlyincludetheprofessionalismofperformance,butalso professionalisminbusinessaspects(dealingwithclients,toutingforbusiness,contract negotiations,andreliability/timing). 2. Access(to(performers:Amajorissueforpotentialclientssuchasagentsandeventmanagersis knowingabouttheperformersinthefirstplace.therefore,exposuretonetworksofevent managementorganisationsiskeysowhenacertaintypeofperformerisrequired,theycan directlyaccessthem BarbadosServicesSector DevelopmentStrategy

31 Health(and(Wellness((( ProgressReport 9 Health'and'WellnessTourism The Health and Wellness sector covers mainstream medical tourism (people travelling overseas for medical treatments, including elective surgery, cosmetic surgery, dentistry etc), Spa and wellness (including pamper spa and wellness retreats), Rehabilitation (including Orthopaedic, additive conditions and brain rehabilitation), Palliative care (for on-going conditions) and assisted living (mainly geriatric). 9.1 GlobalMarket TheglobalhealthandwellnesstourismsectorisvaluedoverUS$100billioncomprisingmedical tourismvaluedatus$40billion,wellnessandspaatus$44.8billion,medicalrehabilitationayus$4 billion,palliativecarelessthanus$1billionandassistedlivingus$1billion. MEDICALSECTOR AccordingtoestimatesofTourism ResearchandMarketing(TRAM),the globalvalueofmedicaltourismin 2010wasoverUS$40billion. Rehabilitat ion) 10%) Figure'5:Health'and'Wellness'Tourism' Assited) living) 5%) palliative) care) 1%) Themostdominantmarketsegments are:complexspecializedsurgeries suchasjointreplacement(knee/hip); cardiacsurgery;dentalsurgeryand; cosmeticsurgeries. Wellness) 6%) Medical) Tourism) 39%) Manydevelopingcountriesare alreadybenefitingfromthisnewtype oftourism,especiallyinasiawhere SingaporeandThailandareestimated toreceivearoundus$900millionper annumfrommedicaltourismwith IndiaandMalaysiagrowingquickly withearningsofus$333millionand US$400millionrespectively. Table(10:(Main(Sources(of(Medical(Tourists( Country Number of Medical Tourists Principle Destinations Spa) 39%) Germany 500,000 (2007) Thailand, India, Turkey, Poland. US 400,000 (2006) Costa Rica, Mexico, Thailand, Philippines and India Middle East 350,000 (2007) India, Singapore, Thailand, United Kingdom, Turkey Canada 230,000 (2007) Cuba, Costa Rica, Hungary, India, Israel, Jordan, Lithuania, Malaysia, Thailand, Belgium, Poland and Singapore UK 100,000 (2007) India, Hungary, Turkey, Germany, Malaysia, Poland and Spain Withcurrentcostsofhealthcareinhomecountriesofmostmedicaltouristsgrowing,itisexpected thatthenumberofmedicaltouristsfromeurope,northamericaandthemiddleeastwillgrow BarbadosServicesSector DevelopmentStrategy 24

32 ProgressReport Health(and(Wellness( significantlyovercomingyears.similarly,thenumberof overseas purposebuiltfacilitiesisalso expectedtogrowwiththisdemand. IntheUS,emergingpoliciesandtrendsarefuellingthedemandformedicaltourism: USHealthcarereformacthasaddedmillionsofAmericanstotheMedicaidprogram, whichdoesnotcoverthetruecostofcare Increaseddemandforoutpatientsurgery(75%ofallmedicaltourismtreatments) Increasedaccesstolowcosttravel ShortageofphysiciansandprimarycareworkersintheUS Millionsofbabyboomerswillbeturning65inthenearfuture,qualifyingforMedicare IncreaseinnumbersofAmericanswithchronicdiseases Governmentsofhostcountriessettingupinitiativessuchasfasttrackvisaandtax breaks Medicalinflationat3.6%outstripsretailinflationof2.1%intheUSA Thekeytoattractingforeign,andespeciallyUS,medicaltouristsisJCIaccreditation.Thereare currentlymorethan255jointcommissioneaccreditedhospitalsoutsidetheusa,thisisthesame accreditationthatmorethan4,800hospitalsintheusreceiveandthesameaccreditationthat Medicarerecognises.AccordingtoJCIsurveys,patientexperienceandsatisfactionatJCIhospitals abroadisgenerallymorefavourablethantheusa;surgicalcomplicationratescomparefavourably and;costsavingsonmostsurgicalprocedurescanexceed50e80%oftheuscost. Withthesefactorsinmind,UScorporationsandmedicalinsurersareincreasinglyfundingmedical tourism.somemedicalinsurancecompanieshaveexplicitlyaddedinternationaltraveloptionsas extras foranynonecoveredservicesandpreeexistingconditions. SPASANDWELLNESS In2007,theglobalmarketforspaswasvaluedatUS$46.8billion 26 fromanestimated71,762spas operatingaroundtheworld.theglobalwellnesstourismmarket,comprises1,485destination resortsandisestimatedtobevaluedatus$6.2billionandemploysaround112,000persons.these destinationspasaccountfor13percentofrevenuesfrom2percentoffacilitiesindicatingthisis, withmedicalspas,ahighvaluesegment. LatinAmericaeCaribbeanisthefourthlargestsparegionintheworld,butitsindustryissignificantly smallerthanthoseofthetopthreeregions(europe,northamerica,andasiaepacific).ithadan estimated5,435spas,withrevenuesof$2.5billionandemploymentof82,694personsin2007. Healthandwellnesstourismisnowaninternationaltrendsetbythehealthconsciousconsumers seekingtoenhancetheirwellbeingthroughtheirtravelexperiences(stillpampering?opportunities andchallengesfacingtheglobalspaandbeautyindustryeuromonitorinternationalltddate:apr, 2010).Wellnesstourismmeanstravellingacrossbordersforspaandwellnesstreatments.Thefocus ofwellnesstourismisonpreventionandhelpingpeoplefacilitatelifestylechanges.the 26 GlobalSpaSummit2010(SRIInternational) 25 BarbadosServicesSector DevelopmentStrategy

33 ProgressReport BarbadosServicesSector DevelopmentStrategy 26 Health(and(Wellness((( opportunitiesfordevelopmentareenormousaswellnesstouristsseekout mindful andnot mindless travelopportunities,withahigherbenefittothemselves,theirbodiesandtheir environment. Thistypeofconsumerseekstolookandfeelbetter,toloseweight,toslowtheeffectsofaging,to relievepainordiscomfort,tomanagestress,ortopartakeintheuseofnaturalsupplementslike vitaminsandmineralstoimprovetheirhealth.adistinctionismadebetweenthehealthandthe wellnessaspects.healthtourismreferstothoseclientswithmedicalconditionswhowouldtravelto experiencehealingtherapies.apersonwhoseeksawellnesstravelexperience,isgenerallyhealthy tostartwith,andseekstherapiestomaintainhisorherwellbeing. Thetoptrendsinwellnesstourismare: o Prevention,ratherthanpampering o SpaGoesareseeking TraditionandAuthenticity,forexampletheTurkishHaman o Integratedhumanbodyvisionwithholistictreatments PureSpa conceptin decline o SilvereSpaeing 78millionbabyboomerssettohit60 o Sanctuary fromoureverincreasingstressfultechnologicalworld o InternationalSpaTourswillreplaceSpatreatmentseGuestswishtoenjoya package oftreatmentsratherthan amassage REHABILITATION Rehabilitationcentresaredrivenbycostsandspecialisms.Forsomecentres,peopletravelfor cheaperrehabilitationafter,forexamplespinalinjury(learningtowalk)orstrokes,whilstothers attractforeignmedicaltouristsduetosomeuniquespecialismorrehabilitationprocessesthatare notreadilyavailableintheircountries,thesecouldincludesportsmedicineordrugrehabilitation (EricClapton scrossroadscentreinantigua). Withthegrowingacceptanceofmedicaltourism,peoplewhoneedspecialistrehabilitation treatmentafteranillnessorsurgeryareconsideringtreatmentabroadasalowcostoption. Rehabilitationisthetermusedtodescribetheprocessofphysicallyrestoringtohealthsick,injured ordisabledpeople.varioustypesoftreatmentareavailable,including:orthopaedicrehabilitation, DrugandAlcoholrehabilitationandBrainInjuryrehabilitation. ASSISTEDLIVING/GERIATRICCARE Thereisgloballyamarketforprovidingassistedliving/nursingandgeriatriccarefortheelderly whichisinternational.themotivationforobtainingsuchservicesoutsideyourcountryoforiginis climate,costandreturningtoroots(diaspora).theservicesprovidedcanrangefromretirement villagestofullnursingcarefacilities. Investorsthroughouttheworldareincreasinglytakingstockofthisrisingdemandandaremaking seriousinvestmentsintheretirementcareindustry.theunitedstatesmarketisthelargestglobally andisconstantlyexpanding.theuscensusbureauestimatesthatthenationalnursingand

34 ProgressReport Health(and(Wellness( residentialcareindustryisworthoverus$26billionayear.asanindicationoftheindustry'sgrowth potential,in2004thenationalinvestmentcentrealsoestimatedthatatotalof33,000professionally managedpropertiesexistedintheunitedstates,withacapacitytoholdover3.6millionseniors,a figurewhichrepresentslessthan5%ofthepotentialustargetmarket.alargeproportionofthe majorretirementcarecommunitiesaregeographicallyconcentratedaroundthesouthernunited StatesandtheCaribbean.ThisislargelyduetotheaffluenceoftheUSpopulationofretireesaswell astheyeareroundfavourableclimatethatalreadydrawspeopletotheregion. AgrowingnumberofAmericansaged50+arenowactivelyconsideringrelocatingoutsidetheUSAto retire.duetoitscloseproximitytotheunitedstatesmexicoremainsthenumberonedestination foramericansretiringabroad.itisestimatedthatoveronemillionamericansarelivinginmexico buttherearenoexactstatisticsforretirees.therecentgrowthofgatedretirementcommunitiesin Mexico,inthecostalarea stargetingusandcanadiansecondhomebuyersandretireesindicated thatthisisagrowthmarket.itisestimatedthatbetween200e300,000americansresideinthese coastalareas.withanincreaseofretiree stherebecomesanincreaseintheneedforreliable,coste effectivehealthcare.alreadythemajorityofamericansresidinginmexicoobtainsomehealthcare insuranceinmexicoastheyarenotcoveredbyushealthinsurancewhenlivingabroad. PALLIATIVECARE Agrowingareaofmedicaltourismispalliativecarewhichincludesmanagementofadversehealth conditionssuchasdialysis,cancermanagementandcare.therearefewstatisticsavailableforthe globalexportservicestradeinthisareabuttheprimemotivationisusuallycostsavings providing similarorbetterserviceforlowercosts. PALLIATIVECARE Agrowingareaofmedicaltourismispalliativecarewhichincludesmanagementofadversehealth conditionssuchasdialysis,cancermanagementandcare.therearefewstatisticsavailableforthe globalexportservicestradeinthisareabuttheprimemotivationisusuallycostsavings providing similarorbetterserviceforlowercosts. 9.2 TheHealthandWellnessTourisminBarbados HealthandwellnesstourisminBarbadoscutsacrossbothpersonalservicesandmainstream tourism.however,specificbreakdownsarenotavailable.littleisknownaboutthissectorin Barbadosbutanecdotalevidenceshowsthatthereissomeactivityacrossthewellness,spa,medical andassistedlivingsubesectors.themajorityofmedicalhealthcareinbarbadosispublicsothatany growthinthissectorislikelytocomefromforeigninvestments.withregardswellness,therearea rangeofwellnessprovidersinbarbadosincludingreiki,reflexology,yoga,aryeveda,herbalandother practitioners. 9.3 PotentialforHealthandWellnesstourisminBarbados Medicaltourismdevelopmentislikelytocomefromforeigninvestmentsratherthanlocalfacilities (asthemajorityofthedomesticsectorispublicandtheprivatefacilitiesarelimited).accordingto JointCommissionInternational(theUSmedicalfacilityaccreditationbody)thereisoneinstitution 27 BarbadosServicesSector DevelopmentStrategy

35 Health(and(Wellness((( ProgressReport accreditedinbarbados(aforeignownedfertilityclinic).thereisalsoaplanforaforeigninvestment tobuildaus$100millionhospitalformedicaltourismby2014. Suchfacilitiescouldattracta1,000foreignpatientswho,withacompanionstayonaveragefor3 weeksandspendus$400perday.combinedwithanaveragetreatmentcostofus$5,000,thissube sectorcouldcontributeus$20million(b$40million)totheeconomy. ThereispotentialtodevelopwellnessandretreattourisminBarbados,especiallygiventhehigher spendrates.forexample,if5,000wellnesstouristswerebroughtinfor14daysatus$1,000total spendperday,thenthesectorwouldbeworthus$5million(b$10million). 9.4 Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. Themaindecisioncriteriaforselectionofhealthandwellnessdestinationsbyinternationalclients are: Accreditationandrecognition Insurance Reputation Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Accreditation(and(recognition.Intermsofmedicaltourism,internationalaccreditationisa must.forus,thisisjciaccreditationandforeurope,middleeastandasia,eitherjciortrent International.Foralternativetherapistsinthewellnesssector,nationalstandardsand/or industryselfregulation/codesofpractiseareimportanttoprovidequalityguaranteestoclients. 2. Insurance:Liabilityinsuranceforbothmedicalandwellnesssubesectorsareimportant, especiallywhendealingwithhigherendclients. 3. Reputation:Thisisagain,iskeytobothsubesectors.Formedical,experienceofdoctorsand successratesplayanimportantroleindecisionmaking.forwellness,awellputtogether story ofthewellnessphilosophyanddifferenceinbarbadosiskey thisconceptisessentiallywhatis beingsold. BarbadosServicesSector DevelopmentStrategy 28

36 ProgressReport Business(Support( 10 Business'SupportServices Definition of Business support services (sometimes also referred to as business development services) are services that support and improve competitiveness within the value chains in Barbados can be services to producers for domestic and international markets, for product manufactures, agricultural producers as well as industry. TheRoleofServicesinCompetitiveness ThekeyconstraintsandchallengesfacingthecompetitiveproductioninBarbados(agriculture, manufacturingandindustry)arescaleandvulnerability.asaresulttheapproachtosupportingthe businesssectorinbarbadosmustnecessarilyfocusonhighervaluenicheproductsandservicesfor boththedomestic(throughsupplytomajorvaluechain,tourism)andexportmarket.topromote thedevelopmentofamorecompetitiveandhighervalueproductionbase,astrategyofimproving provisionofbusinessdevelopmentandsupportservicescanhelp. Highervalueproductionrequireshigherqualityofmanufacturingandservicedelivery.Ithasbeen shownconsistentlythroughouttheworldthathigherqualitycomesfromqualityandsustained provisionofbusinessdevelopmentandsupportservices.formanufacturing,theusgovernment 27 hasrecentlylinkeditssector sresilienceandcompetitivenessthroughthecurrentglobaleconomic crisistousmanufacturersspendingonbusinessservices.usfirmsspend30%ofvalueadded productiononbusinessservices.thiscomparestoonly23%intheukanditaly,18%inspainand Mexicoand13%inIndonesia.Therefore,thereisastrongcaseinincreasingtheavailabilityof businessservicestomanufacturers,agriculturalproducersandindustryinbarbadostoimprovetheir competitivenessandhelpthemgrow.inparallel,thiswillcreateamorevibrantdomesticmarket thatwillstrengthenlocalsuppliers,makingthemmorecapabletoexporttheseservices,both regionallyandinternationally. Thescopeofbusinesssupportservicesrequireddependsupontheindividualvaluechainsinvolved, butgenericallybusinesssupportservicescaninclude: Market(information(services:Accesstomarketdata,includingforinternationaltrade;targeted marketresearch;customersegmentation;customerfeedbacksurveys. Product( development( and( access( to( technology( services: Product design and adaptation; technology information; technology transfer and commercialisation; equipment upgrade; relevanttechnicalskilldevelopment. Procurement( and( sourcing: Information on input supply features, pricing and sources; facilitation of input supplier entrepreneur linkages; facilitation of bulk buying (joint procurement)groups. Training,( technical( assistance( and( advisory( (strategic( and( operational( aspects( of( business): Business incubation for starteups; feasibility studies and business plans; business counselling; twinning and mentoring of existing MSMEs; small business management training (including business and production process management); technical training related to production or service delivery; legal and taxation advice; accountancy, bookekeeping and inventory management. 27 U.S.ManufacturinginInternationalPerspective(2013)CongressionalResearchService 29 BarbadosServicesSector DevelopmentStrategy

37 BusinessSupport ProgressReport Distribution,( transport( and( communicationbrelated( services: Storage and warehousing; transportanddelivery;ictservices. Marketing( services: Trade fairs, product exhibitions and buyereseller meetings (businessetoe business matchmaking); advertising; packaging and labelling design; facilitation of subcontractingandoutsourcing. Facilitation( of( access( to( finance: Linking businesses to banks, microefinance institutions and othernonebankingfinancialinstitutionsservingsmes(leasingandfactoringcompanies,export creditagencies,etc.);providinginformationoncreditschemesandconditions;assistinbusiness planningforloanapplications. Policy( advocacy( and( industry( representation: Industry platform, representation of industry interestsinpubliceprivatedialogue. Thepotentialimpactonproductivityofbusinesssupportservicescanbeextremelysignificantfor firms.evenmandatoryservicessuchasauditing,ifundertakeneffectivelyandefficientlycansave businessintermsoftaxoptimisationandinvestmentplanning.again,thespecificimpactsand effectsofbusinessservicesonproductivityandcostsavingsdependupontheindustrybutafew illustrationsareprovidedbelow: Energy( auditors and consultants could save energy costs of 30e35% 28 In sectors whereenergycostsarehigh(somesectorsenergycostsare20e40%oftotalcosts) thiscouldhaveabigimpactoncompetitiveness. Total( quality( management( (TQM)( and( quality( assurance 5e30% 29 of total costs throughadoptionof,forexampleiso9000. Technical( training( to( farmers could increase productivity by 187% 30 if continuous over2years. Sales(and(marketing(Trainingcanincreasesalesby80% 31 Technology(engineering(and(consulting(couldincreaseproductivitybyover100% 32 ICT( services( to( manufacturers( have a positive return on investment in terms of revenueincreasesof5e20% 33 Procurement(and(sourcing(consultanciestypicallysave15e25%ofprocurementcosts whichcanbe30e60%ofafirmstotalcosts. 34 TheBusinessSupportSectorinBarbados Thenonefinancialbusinesssupportservicesarepartofthebusinessandfinanceservicesgroup valuedatb$2.3billion.dataonthesectorinbarbadosisnotreadilyavailable.tounderstandthe marketpotentialinbarbados,anauditofagriculture,manufacturingandindustrialfirmsisrequired tolisttheservicestheycurrentlyprocuring(includingimportedservicesfromforeignproviders)and servicestheywouldliketoprocure(butcannotduetolackofavailabilityorhighcosts).then throughbenchmarkingindustriesexaminetheservicesthatcouldimprovebusinesscompetitiveness throughoutthevaluechain(althoughfirmsmaynotknowtheyneedtheseservices.finally,anaudit 28 GlobalEnergyEfficiencyBenchmarking(2010)UNIDO 29 ImpactofQualityManagementintheUS(2008)Deloitte's 30 Davies,K.et.al.(2011).ImpactofFarmerFieldSchoolsonAgriculturalProductivityandPovertyinEastAfrica.World DevelopmentVolume40,Issue2,September Bruhn,Miriam,DeanS.Karlan,andAntoinetteSchoar.(2012)TheImpactofConsultingServicesonSmallandMedium Enterprises:EvidencefromaRandomizedTrialinMexico. 32 TheWorldBank.KickStartIrrigationPumps:AdaptingTechnologytoDevelopmentChallenges. 33 ICTsolutionsandlaborproductivity:evidencefromfirmleveldata(2007)JuhaeMiikkaNurmilaakso 34 Afreshlookatprocurement(2011)ByClintonAnderson,DavidFleisch,GregGerstenhaberandSamThakarar BarbadosServicesSector DevelopmentStrategy 30

38 ProgressReport Business(Support( ofallbusinesssupportprovidersinbarbados,theirservices,qualificationsandcapacitymustbe undertakentobetterunderstandandmatchsupplywithdemandforbusinesssupportservices. BusinessSupportPotentialinBarbados Anincreaseinthelevelofbusinesssupportservicesofanadditional5%ofvalueaddedwould increasethenationalmarketforbusinesssupportservicesbyb$307 Table(11:(Increase(in(Business(Support(Services(as(a(percentage(value(added( ( Value(added 35 ( (B$(m)( Increase(in( Business( Support( Services( Agriculture 184.0( 9.2( Manufacturing 357.4( 17.9( Industry 1,425.6( 71.3( TOTAL( ( 98.4( Challengestobeaddressed Ifselectedasaprioritysector,thechallengesforsectordevelopmentwillbeanalysedinmoredetail withinthespecificcontextofbarbados. Themainconstraintstothedevelopmentofbusinesssupportservicesare: UnderstandingtheValueofservicesandwillingnesstopay Qualityofservicesneeded Availability/rangeofservicesavailable(marketsize) Thetypesofconstrainttobeaddressedarediscussedbelow: 1. Understanding(the(value(of(services(and(willingness(to(pay:(Oneofthebiggestconstraintsto thedevelopmentofthebusinesssupportservicessectoristheappreciationbytheprivatesector ofthevalue,importanceandbenefitofbusinesssupportservices.oftenbusiness,especially smallbusiness,withlimitedresources,willelectnottopayforbusinessservices,eitherdoing withoutortryingundertaketheservicedeliveryinehouse.evenwhentheydoprocureexternal services,theysimplylookforlowestcost,notbestquality(oftenabusinesswillonlyprocure servicesithastoobylaw,eglegalandauditservices).thisleadstoineffectivedeliveryofthese serviceswhichdoesnotbenefitthebusiness.greaterunderstandingofthebenefitsofthe businessservicesamongsttheprivatesectorisneeded,aswellasincentivestoencourage procurementofservices.anotherimportantfactorinwillingnesstopayistheprovisionbypublic providersofcertainbusinesssupportservices(suchasexportpromotionoragricultural extensionservices).ingeneral,publicprovidersarelessefficientthantheprivatesectorbutthis cancreateacultureof nonepayment forbusinessservicesbybusinesseswhosimplyexpect nottopay.( 2. Quality(of(services(needed:(Thewillingnesstopayisalsolinkedtothequalityofthebusiness supportservicesavailableandpriceofthoseservices(valueformoneysoserviceshavea 35 BarbadosMetadata(2013)WorldBank 31 BarbadosServicesSector DevelopmentStrategy

39 BusinessSupport ProgressReport return oninvestment).theskills,experienceandqualificationofbusinessservicesproviders willaffectthebenefitstobederivedfromtheseservices.therefore,inordertomakethe expectedgainsfromprovisionofbusinessservicesthereneedstobe quality providers availableinthemarket.( 3. Availability/range(of(services(available((market(size):(Giventherelativesmallmarketand numberofbusinessesinbarbados,theremaynotbesufficientdemandtosustainafullrangeof competitivebusinesssupportservicessubesectors.therefore,therangeofbusinesssupport servicesavailablemaybelimited.evenwherethemarketdemandissufficienttosustaina market,themarketmaybesosmallthatmonopolypositionsmayleadtohigherpricesand lowerqualityofservices.( BarbadosServicesSector DevelopmentStrategy 32

40 ProgressReport Conclusions( 11 Conclusions This section presents an updated and partly disaggregated picture of services and services exports in Barbados. It also examines the prospects, within the global marketplace and national capacity constraints for development of each of the major sectors and recommends the sectors that strategically, Barbados should concentrate, develop and promote Guestimateofsectoralbreakdown ResearchduringthescopingmissionhasincreasedtheunderstandingoftheB$5,524.6services sectorinbarbadosandtheb$3,160servicesexportsinsomegroups.however,evenwherefigures appeartocloselyinformthecompositionofthecategory,thesefiguresarenotveryrigorousand needtoberegardedcautiously.thisisnotasubstituteforamorerigorousanalysisofthe compositionofeachservicesectorinthebarbadoseconomy. FINANCEANDBUSINESSSERVICES Forfinanceandbusinessindustrywearefairlyconfidentthatwehaveagoodunderstandingofthe sector.financeandbusinessisreportinnationalaccountsastotallingb$2.3billion.from estimationsfromthevarioussectorsinbarbados,wecanaccountforaroundb$1billion.ifwe assumeservicestoagriculture,manufacturingandindustryiscurrently15%ofvalueadded (equivalenttothatofindonesiaandmexico),thenthiswouldaccountforafurtherb$300million. ThisleavesB$1billionsoassumingthisismainlydomesticbanking,financeandinsurance,thenthe wholecategoryisaccountedfor.unctadstatdatastatesexportof otherbusinessservices (asube groupoffinanceandbusiness)amounttob$754million.however,unctad,usingbalanceof paymentscalculationscannotfurtherdisaggregatethisfurtherdespitethisbeingapproximatelyone quarterofallservicesexportsand43%ofnonetourismexports.followingresearchandanalysis,we canaccountforoverb$700millionwithapproximately66%attributedtorevenuefrominternational businesscompanies,27%tobusinessprocessoutsourcingexportsand1%fromexportof constructionrelatedprofessionalservices. ( Value(of( the( Sector(( (B$m)( Exports(( (B$m)( Finance&business ( 921.4( Otherbusinessservices( =BPO =IBCs =Professionalservices =Businesssupportservices(nonefinancial) e Insurance( Finance( Computer&information( 22.8 =ICT Royaltiesandlicencefees( BarbadosServicesSector DevelopmentStrategy

41 Conclusions ProgressReport DISTRIBUTIONANDLEISURESERVICES DistributionandleisureservicesamounttoB$1.7billion,ofwhichB$1.4billionisexportcomprising tourists,businesstravelsandforeignstudents.thismeanstheremainingb$300millionisattributed todomesticconsumptionofaroundb$1,400percapitaperannumonretailwhichagain,seems reasonable. Distribution(and(leisure( Hotels/restaurant( Wholesale/retail( Travel( =foreignstudents PERSONALSERVICES Personalservicescategoryistheonlyareawherewedonothaveverymuchfurtherinformation. ThetotalvalueofpersonalservicesarealmostB$300millionwhereweestimatethataroundB$16 million(5%)isrevenueforfeesfromforeignstudents.therefore,95%ofthiscategoryremain unaccountedforandcouldincludeprivateeducationfeesfromnationals,privatehealthcare, cultural,recreationalandsportingservices. Personal( (incl.( health,( education( &( other)( Personalservices( =education( OTHER Theonlyothersectorsspecifiedaretransportandcommunicationsandconstructionwhichare disaggregatedenoughforourpurposesandvaluedatb$610millionandb$375millionrespectively SelectionofPriorityServicesSectors CRITERIAFORPRIORITISATION Whilstitisgenerallyrecommendedthatbetterqualityinformationiscollectedandanalysedpriorto policydecisions,forthepurposesofanoverallstrategicapproachandpolicy,thisisauseful indication.priortothedevelopmentofspecificactivitiesunderthesectoralcomponentsofthe strategy,itisstronglyrecommendedthatadetailedsurveyandbetterunderstandingofthepriority sectorsisundertaken. Thecriteriausedinthisreporttorecommendpriorityservicessectorsfor Value(proposition((medium(term): Employment(generation: ThisistheestimateoftheoverallbenefittotheBarbados economyofdevelopingthespecificsector,basedonanumber ofassumptionsdetailedintherelevantsectorchapter.thisis, ineachcasequantitativeandavailablefordirectcomparison. Wheredirectemploymentfromincreasedactivitiesineach sectorhasbeenestimated,thesefiguresareprovided.where BarbadosServicesSector DevelopmentStrategy 34

42 ProgressReport 35 BarbadosServicesSector DevelopmentStrategy Conclusions( figuresarenotavailablecommentontheemploymentlevels expectedwillbegiven. Quality(of(job: Thenumberofjobscreatedisonlyonepartoftheequation, especiallyinarelativelysmallcountrywitharelativelysmall labourforce.ofequalsignificanceisthequalityofjobcreated intermsofbothincomeandworkingconditions. Ownership: Whetherthedirectbeneficiaryofthesectorislocallyowned businessorforeigninvestors. Ease(of(realisation:( Commentsontherelativedifficultiesofdevelopingthesector andanassessmentofhoweasyitwillbetorealisethe assumedvalueproposition Long(term(prospects:( Assessmentofthelongertermcontinueddevelopment potentialofthesector. ( BUSINESSPROCESSINGOUTSOURCING Value( proposition( (medium(term)( B$110million Employment( generation( 2,000directjobs Quality(of(job(( ( Medium(theBPOsectorishighlycompetitiveandalthoughrelativelywellpaid,it sa highpressureworkingenvironment.assumingmorevalueaddedkposectorswillbe targeted,thejobswillbebetterpaidthanexistingbposegments). Ownership( MixtureoflocalandFDI Ease(of( realisation( Relativelyeasingtobuildontheexistingindustryandtrackrecord. Long(term( growth( prospects( TheglobalmarketforKPOservicesisfairlylargeandgrowingandBarbadoswillonly needarelativelysmallshareoftheglobalmarket.thereisthereforescopetocontinue developingthissector. INTERNATIONALBUSINESSCOMPANIES Value( proposition( (medium(term)( B$125miilion Employment( generation( 750directjobs Quality(of(job(( ( Lowemedium(theservicingofinternationalbusinesscompaniesisprincipallybasedon lowcostmanagement) Ownership( FDI Ease(of( realisation( Ahighdegreeofpromotionmayberequiredtosignificantlyincreasethenumberoftax advisorsgloballypromotingbarbadosasaibcdestination. Long(term( growth( prospects( TheglobalmarketforIBC sisfairlylargeandbarbadoshasrelativelyfewregisteredibcs (forexamplecomparedwithbvi)solongtermsustainedgrowthprospectswouldbe good.

43 ProgressReport BarbadosServicesSector DevelopmentStrategy 36 Conclusions INFORMATIONCOMMUNICATIONSTECHNOLOGY Value( proposition( (medium(term)( B$96million Employment( generation( 800directlyemployed Quality(of(job(( ( High(softwaredevelopmentandrelatedskillsarehighpaidandregardedashighlevel) Ownership( Principallylocallyowned. Ease(of( realisation( Theprincipalconstraintstodevelopmentofthesectorrelatetoavailabilityofskills, experienceandqualification. Long(term( growth( prospects( TheglobalmarketisextremelylargeandBarbadosonlyhasasmallshareofit;therefore, thesectorhaspotentialforfurtherdevelopment,especiallysincetheemployment requirementisrelativelysmall(thatisalargerevenueperemployeeratio). TERTIARYEDUCATION Value( proposition( (medium(term)( US$150million Employment( generation( Afewhundrededucators,butmanymoreindirectjobsinrestaurantandretail. Quality(of(job(( ( Medium(highleveljobsineducationwitharangeofjobsinretail,cateringandleisure) Ownership( Local Ease(of( realisation( Oncefacilitiesareinplace,attractingforeignstudentsisarelativelyeasytask,especially foreltandtvet Long(term( growth( prospects( Growingmarketwithconstraintsintraditionalmarketswhichmeanthereisgoodlong termpotential. CONSTRUCTIONRELATEDPROFESSIONALSERVICES Value( proposition( (medium(term)( B$10million Employment( generation( Afewhundred. Quality(of(job(( ( High(professionalswithhighskillssetandinternationallyaccreditedqualificationsand professionalmembership) Ownership( Local Ease(of( realisation( Realisationofthesearebasedonrelationshipbuildingandnetwrokingwithinternational partners thishasarelativelyhighcostandcanbelongterm. Long(term( growth( prospects( Longtermgrowthisconstrainedbytheavaiabilityandnumberofqualifiedprofessionals inbarbados,whichcannoteasilybegrown.

44 ProgressReport 37 BarbadosServicesSector DevelopmentStrategy Conclusions( CREATIVEINDUSTRIES Value( proposition( (medium(term)( B$10million Employment( generation( Lowhundredsofjobsfromperformers Quality(of(job(( Althoughtheoverallqualityofworkingconditionscouldberegardedashigh(artistes pursuingtheirart)butusuallyearningsinthissector Ownership( Local Ease(of( realisation( Accesstoeventmanagementnetworksmaynotbetoodifficultbutprocurementis dependentontheneeds/demandsoftheclientswhichisoutsidethecontrolofthe performersthemselves theycanonlyofferaqualityproductandwaitforopportunities toarise. Long(term( growth( prospects( GrowthislimitedasthemarketforspecialisedCaribbeanartistesislimited. HEALTHANDWELLNESS Value( proposition( (medium(term)( B$50million(B$40medicalandB$10millionwellness) Employment( generation( High100s Quality(of(job(( ( Highismedicaltourism. Lowemediumskilllevels,butworkingconditions,bydefinitioninthewellnesssector, workingconsditionswillbehigh. Ownership( Medical Foreign WellnesseLocal Ease(of( realisation( FDIpromotionisrequiredformedicaltourismandthisishighlycompetitive,sodifficult todevelop. Wellnessbasedondevelopingandpromotingthe lifechanging:themesthatwellness touristsarelookingfor. Long(term( growth( prospects( Goodpotentialinbothareasasgrowingdemandisallsegmentsofhealthandwellness. BUSINESSSUPPORTSERVICES Value( proposition( (medium(term)( B$98.4million Employment( generation( High100sacrossawidevarietyofservicessectors(includingnewareas) Quality(of(job(( ( Thetypeofjobswillbevariedandsomixedskill(income)levelswillbeattainedacross theentiresector Ownership( Localownership Ease(of( realisation( Hardtosell services tobusinessinbarbadosandsomucheffortwillberequiredto promotetheuseofservicesbyothervaluechains. Long(term( growth( prospects( Goodgrowthprospectsasonceexperienceandcompetenceesaredevelopedin Barbados,thesecouldbesoldwithintheregiontoo.

45 Conclusions ProgressReport RECOMMENDATION Theaboveassessmentsofthemainservicessectors(excludingfinancialandmainstreamtourism)all havepotentialtodevelop.noneoftheseshouldbeexplicitlyexcludedfromthestrategy,orindeed, fromanyothergovernmentpolicyinitiative(forexample,eventhoughtherecommendationfor priority,orrather,focusservicessectorsdoesnotincludewellness,wellnesshaspotentialand shouldbeaddressedwithinthecontextofabroadertourismdiversificationprogramme).intermsof thedevelopmentofanationalservicesstrategy,thefocussectorsrecommendedarethosewith goodpotentialinboththemediumandlongterm,aresustainable,providegoodqualityjobsand linktoacommonthemethatcanbeusedtodevelopthebrandimageofbarbados sservicessector. ItisrecommendedthatBarbadospursueanddevelopitsservicesimagebasedonprovisionof qualityknowledgebasedservicesin: 1. KnowledgeProcessOutsourcing(highervaluesegmentofBPO) 2. ICT(focusingonhigherendsoftwareengineeringanddevelopment) 3. TertiaryEducation(highereducation,TVETandELT) 4. BusinessSupportservices(highqualityservicesthatareproventoincreasevalueaddedand productivityacrossprofessions) Asindicatedabove,theothernonefocalsectorsshouldnotbeignoredandsupport,through associations,clusters,bsciand/orotherbso(businesssupportorganisations)shouldbe encouraged. Medicaltourism giventhelowlevelofprivatehealthcareinbarbados,thegrowth of this sector may lie primarily in foreign direct investment. Therefore, Invest Barbados should focus on attracting others to this sector. As a critical mass of facilities is established, it may become a future focal sector. Guidelines for investmentpromotiontothissectorcouldbeprovided,togetherwithlistsofforeign medicaltourisminvestors. Wellness this sector could be developed on a small scale through cooperation amongst stakeholders and building Bajan wellness products. It would also form partoftheministryoftourismdiversificationstrategy.guidelinesondevelopingthe product havealreadybeenprovided.furtherguidelinesonmarketingchannelsfor wellnesscanbeprovided. Construction related professional services sector is limited by the number of professionals with international qualifications and affiliation. There is scope for developingthissectorthroughaidfundedprocurementandnetworking.aguidefor marketingprofessionalservicescanbeprovided. Creative sector is relatively small, with limited growth and difficult marketing and promotion.however,thereisscopetohelptothecoordinationandpromotionofthe sectorwithmodelssuchasthecaribbeancreativeclusterwhichactsasanoutward agentforartistes. Internationalbusinesscompaniessector thishaspotentialbutthesectorrequires moresubtlepromotion internationalcorporationsusuallyrequirediscretioninibc. However,morecouldbedownthroughinvestmentpromotionandpromotiontotax advisersintargetmarkets. BarbadosServicesSector DevelopmentStrategy 38